Fidelis Insurance Holdings Ltd. Q3 FY2024 earnings call

• Strong top line growth: Gross premiums written increased 25% to $742 million in Q3, year-to-date up 23%, on course for ~20% full-year growth.
• Profitability: Combined ratio 87.4% in Q3, year-to-date 88.6%, both within mid to high-80s target. Annualized operating ROAE 16.4%, year-to-date 13.3%.
• Capital management: Returned $141 million to shareholders since initiating dividend and share buyback programs; repurchased 6.6 million shares year-to-date, including 3.25 million from Platinum Ivy.
• New initiatives: Participated in Lloyd's Syndicate 3123 launched July 1st, expanding opportunities across segments, especially bespoke; new strategic partnership with Euclid Mortgage to provide reinsurance capacity in 2025, estimated to produce ~$35M in gross premiums written.

Specialty: Gross premiums written increased by 22% for the quarter with RPIs at 114%, driven by leadership in major lines. Strong retention rate and new business resulted in 35% growth in property, direct and facultative. Marine: Leveraged participation across marine subclasses and focused on new construction. Aviation: Market remained competitive, with disciplined approach but adverse development in aviation and aerospace due to Russia-Ukraine litigation. Bespoke: Expanded client base and delivered strong gross premium growth in structured credit and political risk. Reinsurance: Saw strong growth in gross premiums written, driven by expanding existing client relationships and attracting new business, with RPIs of 105% following market discipline around rates.

• Expect market opportunities to continue, with pricing adjustments across lines creating a strong rating environment.
• For 2025, aim to maintain core credit share relationships and shape outward reinsurance program, including negotiations on catastrophe bond products and traveler's quota share.
• Preliminary net losses from Hurricane Milton expected to be manageable, in range of $50M to $100M pretax net of reinsurance.
• Rates for 1/1 2025 expected to be consistent with last year, leveraging market discipline from recent weather catastrophes.

• Adverse development in aviation and aerospace due to Russia-Ukraine litigation in multiple jurisdictions (US, UK, Ireland) impacting reserves.
• Market competition, particularly in certain sectors like aviation where opportunities may be affected by market dynamics.
• Uncertainties in reinsurance market dynamics, including potential changes in attachment points, terms, and conditions.

Q: Matt Carletti asked about adverse development in aviation, including dollar amount and changes in reserving process.

A: Allan Decleir noted adverse development in specialty driven by aviation and aerospace litigation in multiple jurisdictions, offset by better than expected loss emergence in property D&F; no change in reserving methodology.

Q: Lee Cooperman inquired about relative attraction of stock repurchase vs writing more business and top line growth outlook for 2025.

A: Dan Burrows stated focus on profitable underwriting growth and capital management, aiming to marry underwriting growth with share repurchases when capital is excess; early to predict 2025 growth, but expect to maintain mid to high-80s combined ratio and 14%-16% ROE range.

Q: Unidentified Analyst asked about G&A and GPW outlook.

A: Allan Decleir said G&A stabilized, no unusual factors; GPW lumpiness due to timing of renewals, no specific pickup implied for 4Q '24.

Q: Robert Cox asked about pricing staying flattish vs peers and net investment income trajectory.

A: Dan Burrows attributed pricing to leadership position, cross selling, and service; Allan Decleir discussed optimizing investment portfolio, selling securities with low yield and reinvesting in higher yielding ones, expecting to maintain high quality book while optimizing.